Big ideas, micro loans: changing small business one loan at a time.

• Author: Kinder, Peri
• Position: SPECIAL SECTION: BANKING & FINANCE

Entrepreneurs with brilliant ideas but no access to funding now have a stronger ally in their small business corner.

Earlier this year, the Utah Microenterprise Loan Fund (UMLF) was recognized as a U.S. Small Business Administration (SBA) financial resource for small business owners. As the SBA's newest microlender in Utah, the UMLF was presented with $400,000 to bump its lending power up to $50,000 for a maximum loan amount, doubling what it was before.

As a designated intermediary lender for the SBA, the UMLF nonprofit organization can now make loans statewide and is accepting applications from small business owners who might have credit issues or no access to collateral, reasons that might dissuade them from applying for, or receiving, a traditional bank loan.

"[The SBA] has been in existence for a number of years, and we've been hoping to do something [with the UMLF] so we could complement what they do," SBA Utah District Director Stan Nakano says. "We needed to partner with a nonprofit and they fit nicely into that box."

While the SBA's average loan amounts are around $400,000, it has loaned up to $5 million, so it's not as easy for the agency to make smaller loans. With the typical microloan averaging $13,000, organizations like UMLF can support the small business industry and administer those microloans.

"Not every small business needs $1 million, or even $100,000. Sometimes they just need a laptop and a place to work," Nakano says.

When UMLF made its first small business loan in 1993, it could only offer up to $10,000 for companies within Salt Lake County. A few years ago, that number was bumped up to $25,000, and now that amount is $50,000. The organization has made nearly 1,000 loans since its inception, totaling more than $14 million.

"People have the talent. They just need help with a little bit of money," says Kathy Ricci, UMLF CEO/executive director. "When business owners come to us, they can feel like they have hope, that they have some control over their destiny."

Securing a loan

For an entrepreneur to secure a UMLF loan, they are asked to attend a free, one-hour orientation meeting, pick up an application, and start working on a business plan and cash flow forecast. Business owners working with UMLF are coached along the way, getting feedback and advice about their business plans and encouraged to create a strong presentation that will be given to the UMLF loan committee.

"We're very different from a bank," Ricci says...